Organisational Change and Transformation

Organisational Change and Transformation INTRODUCTION Organisational change practice and research aims at the improvement and development of organisations for the purpose of enhancing effectiveness and responsiveness to external changes through better people management, competence, communications, systems and structures. It is not a discipline that has more practical relevance in one sector than in another: the methods and approaches of the discipline are being applied in business and government alike. Because of increasingly dynamic environments, organizations are continually confronted with the need to implement changes in strategy, structure, process, and culture. Many factors contribute to the effectiveness with which such organizational changes are implemented. Whether the change processes are essentially unplanned and discontinuous, planned and strategic, or incremental or revolutionary, they have profound implications for people management and development. Change of any sort evokes the need for innovation, creativity, learning and culture change, all of which lie legitimately within the sphere of interest of personnel and development. Professionals working in personnel and development can be central actors in the management of change in such matters as people resourcing, learning and development, reward structures and the development of new sorts of employee relations all in a strategic context. Personnel and development professionals at a senior level need to demonstrate the contribution they can make in helping people in the organisation to: †¢ Recognise and interpret the relationship between organisational vision, capability and the internal and external environments †¢ Mobilise processes that enable change processes at the appropriate level for the requirements of the organisation. There are seven aspects of change readiness according to researches, which include perception toward change efforts, vision for change, mutual trust and respect, change initiatives, management support, acceptance, and how the organization manage the change process. At its core, change readiness involves a transformation of individual cognitions across a set of employees (Amenakis, et al., 1993). It is the people who are the real source of, and the vehicle for, change because they are the ones who will either embrace or resist change (Smith, 2005) Therefore, it is vital to assess individuals readiness perception prior to any change attempt. ORGANISATIONAL BACKGROUND AND PERCIEVED NEED FOR CHANGE: For this Analysis we have learnt and understood a Chemical Company named Omega Chemical Company. Omega Chemical Company Inc. is a Canadian-based company specialized in the manufacturing of chiral compounds such as: Chiral amino alcohols, Protected chiral amino alcohols (BOC and FMOC), Chiral protected amino aldehydes, Beta-amino acids, Amino acids analogues, Building block and more Need for Change: Over the past decade, the chemical industry has been increasingly commoditized. Cost pressures have been abundant and the ability to succeed has become dependent upon highly efficient internal processes and better customer service. To better compete in this environment, one Omega chemical determined they needed to re-engineer their global ordering processes and the systems that support them. Their aim was to create the perfect order process The perfect order process would yield the following benefits: Increase customer loyalty by creating easy, flexible and reliable interactions with the company. Provide the competitive edge of a Six Sigma capable order management process. Eliminate the cost of rework. Maximize employee productivity and satisfaction by providing the right data and the right tools. The technology was available. The perfect order would assure that it is integrated to work more smoothly. This process had many components to it: An integrated desktop that would provide customers with the information they need in the shortest possible time. Technical service representatives armed with knowledge of many topics and access to many types of information everything from product specifications to product data sheets and regulatory information. Easy access to all the information sales representatives need to more quickly address customer goals and needs. A cross-business view of an account, to help them leverage relationships. A portal to the many people who contribute to serving the account, such as marketing, customer service representatives, to allow them to more easily share information. Customer service representatives empowered with all the information they need about a customer or an account from one starting point. Data from SAP, Siebel or other sources would be only a click away. In addition to speeding service to customers, the processes and systems would improve personal productivity of employees as a result of reduced systems look-up, seamless movement across multiple business systems and a consistent interface across multiple communication channels. Integrating customer segmentation and customer service rules facilitates on-the-spot decisions by front-line employees. Training time could also be reduced as a result of an intuitive customer interface and simplified screen navigation. Thus Organisational change was inevitable. Key components for organizational change for Omega Chemicals: Communication channel control intelligently routes and manages inbound/outbound voice, fax and e-mail communications Fast access to enterprise applications such as SAP, Siebel, Rail Fleet Management System Access to Intranet/Internet and other internal databases Customer Account and Contact Profiles in Siebel Activity assignment with sales, technical support and Customer Information Group Customer surveys Reporting DESCRIPTION OF THE PROCESS: Brief Assessment: Establishing a Sense of Urgency Examining market and competitive realities Identifying and discussing crises, potential crises, or major opportunities Forming a Powerful Guiding Coalition Assembling a group with enough power to lead the change effort Encouraging the group to work together as a team Creating a Vision Creating a vision to help direct the change effort Developing strategies for achieving that vision Communicating the Vision Using every vehicle possible to communicate the new vision and strategies Teaching new behaviors by the example of the guiding coalition Empowering Others to Act on the Vision Getting rid of obstacles to change Changing systems or structures that seriously undermine the vision Encouraging risk taking and nontraditional ideas, activities and actions Planning for and Creating Short-Term Wins Planning for visible performance improvements Creating those improvements Recognizing and rewarding employees involved in the improvements Consolidating Improvements and Producing Still More Change Using increased credibility to change systems, structures, and policies that dont fit the vision Hiring, promoting, and development employees who can implement the vision Reinvigorating the process with new projects, themes, and change agents Institutionalizing New Approaches Articulating the connections between the new behaviors and corporate success Developing the means to ensure leadership development and succession Our analysis finds out that there are specifically the seven aspects of an organization readiness for change. Organisation Change Process should analyse all these aspects strategically: 1. PERCEPTION TOWARD CHANGE EFFORTS Employees perception toward change efforts that take place within the company Omega is an important aspect of change readiness. Moreover, employees perceptions of the organizations readiness for change have been identified as one important factor in understanding sources of resistance to large-scale change (Eby, et al., 2000). These perceptions can facilitate or undermine the effectiveness of a change intervention (Armenakis, et al., 1993; Lewin, 1951). Employees as the target of change are central to the success of the change efforts because their attitudes, skills, motivations and basic knowledge form a significant component of the organizational environment in which change is to be attempted (Smith, 2005). Perception influences employees attitudes and behavior intention in facing the impending change. Past experiences, on the other hand, influence perception process in interpreting information that pass through individual cognitive process. Employees perceptions toward the success of previous change efforts also influence change readiness. Information related to change will be associated with the individuals past experiences by giving particular attribute toward the initiated change. Individuals have preconceived notions about the extent to which the organization is ready for change. These perceptions are likely to evolve over time as individuals develop a history within the organization (Eby, et al., 2000). McDonald and Siegal (1993), Iacovini (1993), and McManus, et al. (1995) suggested that employees attitudes toward a pending change can impact morale, productivity and turnover intentions (Eby, et al., 2000). Moreover, employees perception toward companys flexibility in facing change is also crucial. Employees perceptions of the organizations ability to accommodate changing situations by altering policies and procedures was strongly related to perceived readiness for change (Eby, et al., 2000). Employees perceptions of the degree to which their organization has the flexibility to achieve change, and the extent to which they can actively and genuinely participate in the process, are important factors in achieving successful change (Smith, 2005). Thus first step that Omega Chemicals need to take is to analyse and let their employees know the need for the organizational change to the company and their betterment by the organizational change strategies. Management need to let them know that overall benefit of this change management or organizational change will lead to organizational betterment and in turn their growth and betterment. Here Omega Chemicals needs to be very careful as it has been observed in past that employees believe that if there are organizational changes these would not benefit them, else these would be designed to get more work from them or to reduce their numbers in terms of employees size and strength. Thus Management need to draft these strategy very tactically that they can influence the employees and there betterment with these changes. 2. VISION FOR CHANGE A vision states and clarifies the direction in which an organization needs to move. Without a sensible vision, a transformation effort can easily dissolve into a list of confusion and incompatible project and can take the organization in the wrong direction or nowhere at all (Kotter, 1995). Therefore, employees understanding and comprehension toward companys vision and changes vision is very vital. Kotter (1995) also suggested the importance of creating a vision of what the change is about, tell people why the change is needed and how it will be achieved (Smith, 2005). Martin (1993) as well as Terry (2001) pointed out that a vision is an important part of a change process but leaders of organizations need to be aware that a vision should only give a direction to employees (Stadtlander, 2006). People within an organization have to have the same aspiration toward the imminent change. Strebel (1996) noticed that many change efforts fail because executives and employees see change differently. For example, for many leaders, change means opportunity both for the business and for themselves. But for many employees, change is seen as disruptive and intrusive (Stadtlander, 2006). Through active, ongoing and meaningful involvement in the change process people can be helped to see the connections between their personal work and attitudes and overall organizational performance and employees can be encouraged to embrace personal responsibility for achieving change (Smith, 2005). Personal valence, which clarifies the intrinsic and extrinsic benefits of the changes, can help develop momentum for change. Specifically, when employees see how the change will benefit them, they will begin to seek out ways to improve the transition (Bernerth, 2004). However Management Team must have answers for the query or questions raised by the employees. Therefore they should analyse under mentioned points with respect to Omega Chemicals: Operational indicators Practitioners must be able to: 1 Identify the influence of the political, social and economic environment on the organisation and change as a reactive or proactive response. 2 Undertake diagnosis of the influence of such events and processes as mergers, acquisitions, strategic alliances, downsizing, delayering. Knowledge indicators Practitioners must be able to understand, explain and critically evaluate: 1 The implications of globalisation, mergers, take-overs, acquisitions and strategic alliances in the development of organisations as dynamics in the change and transformation processes. Indicative content 1 The emergence of the virtual and network organisation. 2 The influence of concepts such as best value and changing stakeholder requirements. 3 The identification of triggers for change within the organisation. 4 The relationship between change and innovation in organisations. Change Process and Their Implications: Operational indicators Practitioners must be able to: 1 Identify the relevance of the major models of planned change and the different levels of risk they carry, and relate them to different organisational situations. 2 Help to build those processes, routines and systems that ensure transfer of information and understanding from individuals and small groups to the organisation as a whole, to influence strategic decisions and produce the foundations for new capabilities. 3 Judge what will and will not work in the change management context and ensure that the personnel and development role in the change management process is clearly adding value by helping to drive organisational improvements. 4 Make informed choices between large- and small-scale approaches to change management. 5 Assess the level of change required at different epochs in the organisations life cycle; issues of style and speed of change. 6 Analyse the elements for successful change at each stage of the process. Knowledge indicators Practitioners must be able to understand, explain and critically evaluate: 1 Different levels and types of the strategic change process: †¢ from ‘light touch to radical, transactional to transformational, continuous to discontinuous †¢ and the ways each level and type of change is likely to have different effects on people and organisational performance. 2 The ways organisation members understand, identify and use different triggers of change and transformation, both internal and external. 3 Processes for the evaluation of success, failure and risk in the change process, recognising the implications of success or failure for future change processes in the organisation. 4 Strategies and techniques for the successful implementation of the change management effort project management, participation and process management. Indicative content 1 The dynamics of change and: †¢ the strengths and limitations of Lewins fundamental change model †¢ the assumptions that underlie different approaches to change. 2 The strengths and weaknesses of the planned change approach. 3 The distinctions between emergent, planned and discontinuous approaches to change. 4 The role of the senior management group and the chief executive officer in the change process. 5 The scope of managerial decision-making in relation to change, transition and transformation. 6 Issues of ‘top down and ‘bottom-up change and reconciling them both. 7 Risk assessment/management in change and transformation situations. 8 Processes that mature, successful organisations can use most effectively in the change processes. 9 The critical significance of diagnosis to identify the need for, and the processes of, change, transition and transformation. 3. MUTUAL TRUST AND RESPECT Individual and organizational readiness and capacity for change needs to be based on a sound foundation of mutual trust and respect. It is important that a sufficient amount of trust is established to allow staff members to openly express dissenting views and compromise democratically. According to Cummings and Huse (1989), for change efforts to be successful, employees must trust not only the management, but also their co-workers (Eby, et al., 2000). Mutual respect and trust are the important foundations for an effective work team. Sundstrom, et al. (1990) revealed that organizations are increasingly implementing work teams for many different reasons; to better meet customer needs, to increase innovation, and to improve organizational productivity (Eby, et Al., 2000). He, and also Goodman, et al. (1988) found evidence that work teams can enhance a variety of important organizational outcomes under appropriate conditions. While Goodman, etal. (1988), as well as Cohen and Bailey (1997) found outcomes associated with the use of work teams include more favorable employee attitudes and other quality of work life indicators, as well as enhanced productivity and overall organizational effectiveness (Eby, et al., 2000). 4. CHANGE INITIATIVE Organizations are continually confronted with the need to implement changes in strategy, structure, process, and culture (Armenakis, et al., 1993). This is because the world has grown increasingly complex, resulting from the greater interdependence among world economies. At the same time, the world has become increasingly dynamic, resulting from the information explosion and worldwide communications (Zeffane, 1996). Without undertaking change, organization will lose its ability to compete. Without introducing adequate change in a timely and ethical manner, organizations will face difficult times and significantly reduce their chances of long-term survival (Christian and Stadtlander, 2006). Most successful change effort begin when some individuals or some groups start to look at the companys competitive situation, market position, technological trends, and financial performance. They then try to communicate their findings, especially those that are related to crisis, potential crisis, or great opportunity that may arise This first step is essential because just getting a transformational started requires the cooperation of many individuals (Kotter, 1995). All members of the organization should have the privilege to propose or initiate necessary change. But at the end it is the organizations leader who has to decide or initiate the necessary changes. Organization leaders become leaders because of their planning skills and their abilities to envisage and communicate a better future (Zeffane, 1996). However, people in the organization must be given the opportunity to be involved in all aspects of the change project and they must be given the opportunity to provide feedback (Waddel and Sohal, 1998). It is people who make up organizations and it is they who are the real source of, and vehicle for, change. They are the ones who will either embrace or resist change. Actually, people do not resist change per se, rather they resist the uncertainties and the potential outcomes that change can cause (Waddel and Sohal, 1998). If Organizational change is to take hold and succeed then organizations and the people who work in them must be readied for such transformation (Smith, 2005). 5. MANAGEMENT SUPPORT Management support for change efforts is an essential factor in creating change readiness. Armenakis, et al. (1993) revealed that the degree to which organizational policies and practices are supportive of change may also be important in understanding how an employee perceives the organizations readiness for change (Eby, et al., 2000). This, according to Beckhardt and Harris (1987), and also Schneider, et al. (1992), in Eby et al. (2000), may include flexible policies and procedures, and logistics and systems support (for example, quality equipment, monetary resources). In addition, Armenakis, et al. (1993), as well as McManus, et al. (1995) also found that the level of trust in management may foster perceptions that the organization can withstand rapid organizational change (Eby et al., 2000). Supports for change should be reflected in an effective change leadership. An effective leadership involves monitoring change, making the necessary mid-course corrections, and knowing when to initiate a new vision. Leading and managing strategic change requires that leaders have the capacity to learn from and adapt to change. In that process, organization learning is fostered in an environment of openness and mutual trust that allows people to embrace change and experiment without feeling threatened (Zeffane, 1996). One form of management support toward organizations change effort can be reflected by forming a special team. The team is responsible to conduct analysis toward influencing internal and external conditions, plan change process in more detail, identify possible risks and anticipated actions, and to control implementation including progress evaluation and conduct adjustment toward real situation. Management support can also be reflected from how change is accommodated by management through realignment of performance evaluation and employee compensation with change initiative program. Change demands sacrifice from employee. During change process, employee will feel uncomfortable with the new surrounding. Thus, sacrifice, participation and commitment from members of organizations have to be rewarded through performance evaluation and compensation. Management action toward any obstacle in dealing with change process reflects the extent of management support. Confidence that management has taken optimal steps to face any obstacle reflects the change readiness level. 6. ACCEPTANCE Change should be able to improve the organizations overall performance. However, for many employees, change can create feelings of uneasiness and tension, and as the change begins to take shape, organizational members may feel a sense of uncertainty and confusion (Bernerth, 2004). Because organizational change typically impacts how work is accomplished, an employees reaction to the specific type of pending change may also be important (Eby, et al., 2000). Employees are willing to accept change if they are convinced that the change is beneficial for them. However, many employees do not realize the benefit and advantage of change. They are only concern about the immediate result. On the other hand, the benefit of most change can be enjoyed over a period of time. Developing understanding of the nature of and reasons for change in the early stages can provide a sound base for subsequent changes and a greater willingness to take risks and extend beyond current boundaries (Smith, 2005). A well planned change would not be accomplished without the support of capable and committed change agent. Beckard and Harris (1987) argued that reshaping capabilities involves the knowledge, skills, and abilities of the organization as a whole to carry out the necessary requirements for successful change implementation (Jones, et al., 2005). Turner and Crawford (1998) discussed organizational capabilities needed for change. They proposed a taxonomy consisting of engagement, development, and performance management capabilities. Engagement is based on informing and involving organizational members in an attempt to encourage a sense of motivation and commitment to the goals and objectives of the organization. Development involves developing all resources and systems needed to achieve the organizations future directions. Proactively managing the factors that drive the organizations performance to ensure it consistently and effectively achieves the intended change is the capability Turne r and Crawford label performance management (Jones, et al., 2005). Changes always involve risks. Change involves moving from a known state to an unknown one, of ending the way things are done and doing things in new ways, of letting go. Thus, to reduce this risk, change readiness is mandatory. A failure to assess organizational and individual change readiness may result in managers spending significant time and energy dealing with resistance to change. An investment in developing change readiness can achieve a double benefit. Positive energy goes into creating preparedness for the changes and, in turn, there can be a significant reduction in the need for management of resistance once organizational revival is underway (Smith, 2005). 7. MANAGING CHANGE TRANSFORMATION PROCESS Following are the few vital steps which Omega Chemicals need to take for Organisational Change: Step 1 Getting organised Have a strong policy Make senior-level managers accountable Have a clear change-management procedure Communicate and include everyone Review and challenge The organisation should have a clear policy for management of organisational change. This should set out principles, commitments and accountabilities in relation to impact on health, safety and the environment. Ideally the policy should commit to proportionate consideration of all organizational changes, large and small; as even those not at first connected to safety need to be given consideration to confirm whether or not they may have indirect impacts on safety. Commitment and resources Although the motivation for the change may be commercial, and not obviously connected with safety, major accident prevention must be regarded as core business, not a side issue. Senior management need to demonstrate a clear commitment to safety by their actions, from the outset. There should be a distinct safety focus within overall change processes, with positive objectives. Make a senior, highly influential manager the sponsor or champion for this. They should ensure the safety aspects of the change receive an appropriate level of resource and attention. The effort and resource put in must be proportionate to: the complexity of the change; the scale of the hazards concerned; and the degree to which the change may impact on the management of major hazards. This can be by categorising of changes, with greater importance and a higher level of management approval for more safety-significant categories. Clear systems Organisational change should be planned in a thorough, systematic, and realistic way. You should follow a documented and structured procedure for each element of organisational change management. This is similar to the processes for managing plant change. The following should be clear: _ Identify the processes or activities that are to be carried out (to ensure that risks arising from the change are identified, assessed and reduced to as low as is reasonably practicable). _ Set out the protocols to be followed. _ Who is accountable and who is responsible for these activities? Getting organised checklist Dont make too many simultaneous changes, resulting in inadequate attention to some or all. Dont delay or defer safety issues c